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JOHANNESBURG (Reuters) - South African Finance Minister Pravin Gordhan could be charged with graft as soon as this week, the City Press newspaper reported on Sunday, citing senior sources in the police, the National Prosecuting Authority (NPA) and the tax service.

The AFP news agency quoted an NPA spokesperson as saying "there is no decision whatsoever to prosecute anyone", but that police had given prosecutors a docket on Friday. Neither Gordhan nor the prosecuting service could be reached by Reuters.

Last week, police summoned Gordhan in connection with an investigation into a "rogue spy unit" set up in the revenue service when he headed the organization, rattling South African markets and sending the rand down 5 percent.

The investigation first came to light in February and political pundits have said Gordhan is being undermined by a faction in the government and ruling African National Congress (ANC) allied to President Jacob Zuma.

According to Sunday's report in City Press, 30 witnesses have been called to testify against Gordhan and three former officials from the South African Revenue Service (SARS).

The newspaper said Gordhan would be charged with corruption for allegedly granting early retirement to Ivan Pillay, a former commissioner of the South African Revenue Service who is also under investigation. It said charges could be brought as soon as this week.

Zuma said on Thursday he backed Gordhan but was powerless to stop a police investigation into him, signaling a prolonged tussle that could add to market volatility.

South Africa's credit rating is set to be cut to junk status this year, according to a Reuters poll this week, with economists surveyed citing the heightened political risk around the Gordhan saga.

Gordhan commands huge respect in the markets and his departure would be a serious blow to Africa's most industrialized country as it teeters on the brink of recession.

The Sunday Times said Gordhan had told a meeting of Treasury staff on Friday that he and his deputy Mcebisi Jonas could be removed in a cabinet shuffle. Treasury officials did not immediately respond to requests for comment.